43. GOP Tax Nonsense

14 Feb

Republican candidates of 2016 have promoted three main ideas for income tax rule improvement:

1. A lowered tax rate for all, but continuing the current general system.
2. Simplification of income tax code.
3. A single “flat” income tax for all.

Where details on plans have been supplied there are some variations within each plan.  All three ideas are seriously flawed and all three provide great benefits for the wealthy, which is why Republicans propose them. And they provide great benefits to their rich campaign contributors.

1. Any lowered tax rate for very rich people will result in either higher taxes for the non-rich or reduced services for them. Its always a see-saw: reducing one causes increase for the other. People at the lower end of the pay-scale pay little or no taxes at all, and so do not benefit. But lowering general tax rates always makes the rich richer.

2. Republicans always love a really simple tax code because they would avoid all of the rules that prevent them from abusing the system. Ordinary workers with salaries already have a simple code and can finish their returns in a couple of hours; or can pay someone a few bucks to do it for them. On the other hand, rich people usually have complex incomes, expenses, deductions, stock trades, salaries they pay, business entertainment, IRA’s, bonuses, subsidies, etc. Rich people like fewer rules because rules limit what they can get away with. It is similar to their dislike of regulations. The more flexibility they have in preparing their taxes, the easier it is to game (cheat) the system. It takes a lot of code to cover all the possibilities. For example, there are many ways to describe what constitutes a valid “business meal expense”. Buy one of those cheap, tax code summaries and you will see all of the situations that need to be covered. I personally ran two small businesses so I understand why the tax code complexity is needed.

3. Most Republican candidates have advocated a single “flat” income tax with a rate of 10 to 15 percent for all. With that plan, rich people greatly benefit: a reduction of the 35% rate to say, 15 percent. Poor people who can barely survive on what the earn, would pay more than their current zero payment. One Republican candidate said: that’s OK because everyone should have some skin in the game — and this candidate is an avowed Christian.

Finally, why is it wrong to make the wealthy wealthier, and the poor poorer? The main reason is that over the last few decades, as the rich profited, they were more and more able to “bribe” congressmen with contributions, so that they would create tax and subsidy laws to make the wealthy even richer. Another reason is that when extremely rich banks and insurance companies failed, the ordinary tax payers had to bail them out. It is also true that most very rich people use a lot of resources such as extra policing, government services, military protection, etc. And they have accountants and lawyers to help them make even more money. Its Ok to be rich, but when some people are homeless and/or starving, the extremely rich need to give some back.

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